SVB & Regional Banking 2023

What you'll learn

• ✓Explain SVB's duration mismatch

Lessons

1. 🏃
   The Fastest Bank Failure

   42 billion dollars in one day
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2. The Deposit Flood

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3. The Duration Math

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4. The Twitter Bank Run

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5. Contagion and the BTFP

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6. Final Boss: The Three Lessons

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Sources

All content is drawn from the sources below. We deliberately avoid unverified material.

• Review of the Federal Reserve's Supervision and Regulation of Silicon Valley Bank (Barr Report)
  Board of Governors of the Federal Reserve System · institutional
  April 28, 2023. Primary source for the SVB collapse: deposit growth from 61B (2019) to 189B (2021), the duration mismatch on the bond portfolio, the ~15 billion of unrealized HTM losses by year-end 2022 against ~12 billion of tangible equity, the ~95 percent uninsured deposit share, the 42 billion outflow on March 9 and 100 billion queued for March 10, and the supervisory failure findings. The single most important source for this module.
  https://www.federalreserve.gov/publications/files/svb-review-20230428.pdf
• FDIC Press Releases on Silicon Valley Bank and Signature Bank receiverships (March 10 and 12, 2023)
  Federal Deposit Insurance Corporation · institutional
  Source for the timeline of the SVB and Signature failures, the systemic risk exception invoked on March 12, 2023, and asset sizes. Backs the lessons on bank seizure mechanics and uninsured-deposit treatment.
  https://www.fdic.gov/news/press-releases/2023/pr23016.html
• Bank Term Funding Program (BTFP) term sheet and FAQ
  Board of Governors of the Federal Reserve System · institutional
  March 12, 2023. Source for the central design feature of the BTFP: lending against eligible securities at par value, for up to one year, to break the forced-sale spiral. Used directly in the contagion lesson.
  https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312a.htm
• Monetary Tightening and US Bank Fragility in 2023
  Brookings Papers on Economic Activity (Hanson, Kashyap, and Stein) · academic
  Spring 2023 paper. Quantitative academic post-mortem on the SVB-style fragility across the US banking system: the duration risk on bond portfolios, the role of uninsured deposits, and the asset-liability mismatch. Backs the duration-math lesson and the boss-lesson three-ingredient story.
  https://www.brookings.edu/articles/monetary-tightening-and-us-bank-fragility-in-2023/
• SVB Financial Group 10-K and 10-Q filings (2021 and 2022)
  US Securities and Exchange Commission (SVB Financial Group) · institutional
  Primary financial filings used to confirm the 2019 to 2021 deposit growth, the size and composition of the held-to-maturity bond portfolio, the average yields, and the tangible equity figures cited in the duration-math lesson.
  https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000719739&type=10-K
• FDIC Quarterly Banking Profile
  Federal Deposit Insurance Corporation · data
  Industry-wide context on uninsured deposit shares, unrealized securities losses across US banks in 2022 and 2023, and asset-liability dynamics. Backs the comparison between SVB's ~95 percent uninsured share and the industry average.
  https://www.fdic.gov/analysis/quarterly-banking-profile/
• Federal Reserve and FDIC joint statement on systemic risk exception (March 12, 2023)
  US Department of the Treasury, Federal Reserve, and FDIC · institutional
  Source for the decision to fully protect all SVB and Signature depositors, including those above the 250K FDIC cap, under the systemic risk exception. Used in the contagion lesson.
  https://home.treasury.gov/news/press-releases/jy1337
• JPMorgan Chase 8-K on First Republic Bank acquisition (May 1, 2023)
  JPMorgan Chase & Co. via SEC EDGAR · institutional
  Source for the May 1, 2023 First Republic seizure and JPMorgan acquisition, including the asset size that made it the second-largest US bank failure ever. Used in the contagion lesson.
  https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000019617&type=8-K
• FINMA and UBS / Credit Suisse press releases on the emergency merger (March 19, 2023)
  Swiss Financial Market Supervisory Authority (FINMA), UBS Group AG, Credit Suisse Group AG · institutional
  Source for the forced UBS acquisition of Credit Suisse on March 19, 2023, and the explicit attribution of Credit Suisse's troubles to long-running scandals (Archegos, Greensill, leadership turnover) rather than SVB-style duration losses.
  https://www.finma.ch/en/news/2023/03/20230319-mm-cs-ubs/